New Jersey Business Brokers: Article About Avoid Overpricing Or Underpricing Your Business

Selby Associates business brokers explain a common term used by New Jersey businesses:Selling Strategy

The plan used by the business adviser and seller to attract the highest paying buyer that meets all of the seller's goals in transferring ownership of the business. Every business needs a selling strategy to insure the best price and smoothest transition.

Rob Selby, one of our New Jersey business brokers answers a question:What is a Letter of Intent?

A Letter of Intent formalizes the sales agreement between the seller and buyer of a business. It sets forth the basic agreements of the sale and includes information about the sale timelines, the parties' obligations, and the price and other terms of the sale. While portions may be non-binding (either party may back out of the sale), they indicate seriousness about the potential sale. Your business adviser will consult about the right time to enter a Letter of Intent and about the specific provisions right for your business.

Selby Associates: Confidential business broker in New Jersey

No matter how much you think your business is worth, its value is only as much as a buyer is willing to pay for it. Price is the most important aspect of a business sale to both the buyer and the seller. The buyer doesn't want to pay too much and the seller doesn't want to sell for too little. Overpricing happens when a seller think they're business is worth more than it is, or when they're determined to walk away with a certain amount of profit. Under pricing happens when the sale needs to happen quickly and the seller is afraid that if the price is too high they'll have to sit on the listing for years before a buyer comes along. To avoid wrongly pricing your business, you should work with an broker who has experience valuing businesses and analyzing markets to get you the right price and determine a proper selling strategy for your business.

The best way to insure you're asking the right price is to have one of our New Jersey business brokers perform a professional valuation. There are a number of methodologies used in business valuations, and your broker will know which method is best to make your business look promising. The broker will look at your net income, expenses, tangible and intangible assets and your company's goodwill when determining price. He or she will also perform market research to analyze comparable sale prices of similar businesses that have recently sold and those that are currently on the market.

Price is also affected by your financing terms. If you want all cash, you may not get offers as high as you'd like. If you're willing to offer seller financing or pre-qualify your business for an SBA loan, buyers are more willing to pay your asking price or close to it. Sellers who are willing to accept down payments and lender financing are in a better position to ask a fair market value and efficiently close the sale.

Before listing your business for sale, make sure you talk to a business broker so you're company can be fairly valued and priced and so that you can close a successful sale.

A buyer can seem promising until it's time to arrange financing. Many deals fall through during the finance stage because buyers find out that a bank won't approve their loan or that a seller isn't offering any sort of financing and they can't afford to pay one lump sum payment.

The business brokers from Selby Associates of New Jersey would be happy to answer any question you have about corporate exit planning or business mergers.

The majority of business buyers need some sort of financing in order to close the deal. The type of financing you're willing to offer can help make or break the deal. You can go over all of your options with a business broker who is experienced in helping sellers arrange financing agreements and organizing their books so banks don't have reason to deny loans.

If your accounting books aren't organized you may never get a bank to agree to finance a buyer. Your business broker can help you recast your financial statements and reorganize your books so that your business looks clean and organized to the lending institutions. Any unreported income will need to be handled and no future income can go unreported. Tax papers must be in order and all of your tax matters must be handled before attempting to sell your business. Your business broker can work with your company's accountant to fix any financial mistakes and get your business listed.

Whenever the economy takes a downturn, lending institutions start tightening their belts and being very selective about who receives a loan. Even buyers who could have gotten a loan previously may be denied for small reasons, putting your deal at risk of being dropped. Business investors are aware that when credit crunches happen banks aren't necessarily the place to receive lending. Buyers will start to look to seller financing as a means to finance the deal. Your business broker can help you figure out the seller financing options available so that both you and the buyer end up with a good deal.

Another alternative is to become pre-qualified to accept SBA loans from buyers. This will help the transaction move smoothly since the SBA knows that your business is safe to provide a loan for and all that's needed is approval of the buyer. Suggest that buyers utilize the SBA loans. As long as you organize all of your financing strategies with your business broker, you shouldn't lose a deal to lack of funds.

Contact Selby Associates today

For further information or to schedule a meeting, contact us at (856) 424-3373 or via the form below.